US hits out at China over protectionism

China is increasingly closed to foreign businesses, according to Gary Locke,
the United States' Commerce Secretary, in testimony to the Senate.

China is increasingly closed to foreign businesses, according to Gary Locke, the United States' Commerce Secretary.Photo: AFP

By Malcolm Moore in Shanghai

3:19PM BST 24 Jun 2010

Mr Locke spoke in the wake of last month's Strategic and Economic Dialogue between the US and China in Beijing which produced little agreement despite the efforts of hundreds of negotiators.

In front of a Senate committee, Mr Locke said the US continues to have "legitimate concerns with China's approach to economic growth."

He added: "Despite progress in many areas, far more needs to be done before we can be sure that commercial trends affecting US businesses in China are once again heading in the right direction. This perception is increasingly echoed by American businesses and increasingly spoken aloud".

"US companies operating in China are not granted the same degree of openness and fair treatment that foreign companies, including private Chinese companies, receive in the US market," he added.

His comments reflect the exasperation of many members of the foreign diplomatic and business community who have been faced with intractable and growing Chinese opposition over the past year.

Since the financial crisis, China has prioritised the strengthening of its own companies, often at the cost of foreign competitors. Many companies have accused the Chinese government of tilting the playing field by excluding them from sectors, rigging tender offers and imposing or enforcing often impossible regulations.

"The flip side of the promising story about the success of many individual exporters and US companies in China is the difficult policy and regulatory environment that the US business community still faces," said Mr Locke.

He also accused the Chinese government of advancing its own state companies and retreating on liberalisation.

"Over the last five years, the Chinese government has identified key sectors that must be 'state-dominated' and others that will stay 'largely in state hands,' slowing a long-term trend of economic liberalization.

"As a result, there are concerns that the state-owned sector is growing and that the sway of government policy in place of market principles has been increasing," he said.

America has yet to find a solution to the trade tensions between the two sides, with China giving away few concessions at the talks.